Labour participation rates expected to rise in Malaysia

According to the latest research briefing (4 Sep) by Oxford Economics on Asia’s labour supply, the labour participation rate (PART) in Malaysia is expected rise.

Written by Louis Kuijs, Head of Asia Economics, Oxford Economics; he said: “We expect the participation rate to rise further in Japan and forecast significant increases in South Korea, Taiwan, Hong Kong, Malaysia, Thailand, Indonesia and the Philippines. But we see only a modest increase in China and a mild fall in Australia.”

In fact, the study stated that many governments have taken measures to boost PART to mitigate the demographic pressures.

However, labour supply growth is expected to decline in almost all Asian economies – with Japan, South Korea, Taiwan and Thailand expected to see the labour force shrink by between 0.7% to 1.1% per year in 2027-2036.

In terms of the impact on labour supply growth compared with the starting position in 2007 to 2016, the negative shift in the coming 20 years will be particularly large in in South Korea, Taiwan and Singapore.

According to the report, the demographic transition is nothing new for some Asian economies (notably those in the North-East). In 2007-2016, Japan’s working-age population (15 to 64) declined by an average 0.9% per year.

It only grew by 0.4% to 0.6% in China, South Korea, Taiwan and Hong Kong, after much faster growth in earlier decades. The report said: “These economies have already felt the impact of demographic changes, and adjusted and responded to them, to varying degrees.”

On the other hand, in the other major Asian economies growth of the working-age population in 2007 to 2016 ranged from an average 1.4% in Australia to a whopping 2.4% in Singapore.

Kuijs’ report also showed projected changes in the working age population through 2036. While the general trend is towards slower or even negative growth, the extent varies strongly across the region. He wrote: “Singapore is expected to see a decline in its working-age population growth, in part because of less immigration after a recent policy shift.”

“Malaysia will also face a large deceleration, while South Korea, Taiwan, China, Thailand and Hong Kong will see growth turn negative,” he concluded.